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In This Week's Issue
» Funding Status Update
» Black Holes: Part I – Introduction
» E-Rate Updates and Reminders
» Schools and Libraries News Brief dated December 6 – Form 470 Process

E-Rate Central News for the Week
December 9, 2013

Introduction

The E-Rate Central News for the Week is prepared by E-Rate Central. E-Rate Central specializes in providing consulting, compliance, and forms processing services to E-rate applicants. To learn more about our services, please contact us by phone (516-801-7804), fax (516-801-7814), or through our Contact Us Web form. Additional E-rate information is located on the E-Rate Central Web site.

Funding Status

The SLD has announced that the FY 2014 application window will open Thursday, January 9, 2014, at noon EST, and will close on Wednesday, March 26, 2014 at 11:59 p.m. EDT.  We assume that this window period anticipates the approval and online implementation of the revised Form 471.

Wave 30 for FY 2013 will be released on Wednesday, December 11, 2013, for $31.6 million.  Funding is currently being provided for Priority 1 services only.  Cumulative funding for FY 2013 will be $1.51 billion.

Wave 71 for FY 2012 will be released on Thursday, December 12, 2013, for $4.60 million.  Priority 2 funding is being provided at 90%, and is being denied at 89% and below.  Cumulative funding for FY 2012 will be $2.81 billion.

Black Holes: Part I – Introduction

This is the first in a planned series of discussions concerning what is unaffectionately known in the E-rate community as a “black hole.”  An E-rate applicant and/or service provider is said to be in a “black hole” when one or more of its applications remain pending for extended periods of time, often with no indication of the nature of the problem and with no timeframe or clear process for resolution.  Typically, the only official explanation for the delay is that the application is “under review.”  It is important to note that although USAC often bears the brunt of the criticism for these long delays, the deepest black holes result from ongoing investigations outside their jurisdiction.

At the offset, we should also acknowledge that black holes are the exception to the rule in E-rate.  The vast majority of applications are reviewed and approved in a timely manner — at least during the current funding year — and most of those are “approved as submitted.”  As a whole, the E‑rate process works well.

But this is a small consolation for those stuck in black holes.  Long delays in E-rate funding have created severe budgeting problems for a number of schools and libraries and, in some cases, for the service providers who serve them.  More importantly, from a national perspective, the delays can deprive many students of critical access to new technology for extended periods.  For example, several hundred thousand students at large urban school districts subject to black hole delays have been deprived of E-rate benefits throughout their entire high school careers.

We have discussed the black hole issue in the past, but two recent events suggest that this is a good time to revisit the subject.  In particular:

  1. As we have been discussing over the past few months, the FCC is embarked on a major effort to revamp the E-rate program.  One of the three key objectives of the E-Rate 2.0 NPRM is to streamline program administration.  Although the NPRM itself does not specifically address the black hole problem, several important sets of comments did.
  2. As an encouraging sign, we have just witnessed one large school district’s “escape” from a massive black hole.  Over the past month, Dallas ISD has received the following funding:

Recent Dallas ISD Funding

FY

Wave

Date

Funding

2005

67P

11/19/13

       $ 3,732,568

2007

81R

12/02/13

          4,281,868

2008

81V

11/26/13

        12,256,463

2009

95S

12/04/13

        32,190,083

2010

118

12/06/13

        34,142,935

2011

104

11/19/13

          1,019,748

2012

68

11/15/13

        11,306,405

      $ 86,603,916

Part of the Dallas black hole problem was well documented.  It stemmed from procurement violations highlighted by the 2008 conviction of a former Chief Technology Officer on bribery charges and the 2009 district settlement with the Department of Justice.  The settlement involved the repayment of $750,000; the relinquishment of over $150 million in pending E-rate requests; and a detailed compliance agreement.  Shortly after the settlement was reached, Dallas received the approval of over $21 million in E‑rate discounts for FY 2006.  But as shown above, seven other years of funding mysteriously (at least to us) remained in a black hole until last month.

We plan to continue this black hole series in upcoming newsletters to:

  • Quantify the number and dollar volume of long pending applications.
  • Calculate a “student-year” figure for pending applications to measure the impact of delayed funding.  In the Dallas case, for example, the funding shown above represented a delay of over 4.5 million student years.
  • Explain two variations of applicant black holes, “direct” and “indirect.”  A “direct” black hole is one related primarily to USAC concerns with the applicant itself, affecting both the applicant and one or more of its suppliers.  An “indirect” black hole is one related to USAC concerns with a specific supplier, affecting both the service provider and many or all of its customers.
  • Explain the difference between “front-end” and “back-end” black holes.  “Front-end” refers to the more common pre-funding delays.  “Back-end” refers to delays in the invoice approval process.  We have begun to see cases in which an applicant emerged from a front-end hole only to fall into a back-end hole when invoices are subjected to extended reviews.
  • Discuss a number of suggestions which have been proposed to better deal with — and provide greater “transparency” (another goal of the E-Rate 2.0 NPRM) — black hole situations.

E-Rate Updates and Reminders

Form 486 Deadlines:

Typically, a Form 486 must be filed no later than 120 days from FCDL issuance or the start of service.  Assuming services started July 1, 2013, the deadlines for early FY 2013 funding waves 1-12 have already passed (although USAC will be giving a grace period to late filers).  The upcoming Form 486 deadlines for the remainder of the year are:

                                          Wave 13                12/12/2013
                                          Wave 14                12/19/2013
                                          Wave 15                12/26/2013

Applicants missing these deadlines will receive Form 486 Urgent Reminder Letters giving them an additional 20 days to file.  The initial batch of warning letters was mailed three weeks ago carrying a final deadline of Wednesday, December 11th.

FCC Broadband Expansion Funding:

The FCC announced last week that it had approved over $255 million in funding for carriers to provide new broadband access to nearly 400,000 homes and businesses in rural areas of 41 states.  This funding is from the Connect America Fund, another one of the Universal Service Fund programs.  Although not directly E-rate related, this funding may prove helpful to rural schools promoting 24x7 learning dependent upon home Internet access.

Schools and Libraries News Brief Dated December 6 – Form 470 Process

The SLD News Brief for December 6, 2013, reviews the process for filing a Form 470.  The article covers the following topics:

  • Reasons to file a Form 470
  • Do’s and don’ts for completing a Form 470
  • The 28-day posting requirement
  • Conditions to be met when issuing an RFP
  • Form 470s and existing contracts

Note, under the second bullet, that the News Brief indicates that a Form 470 must not “Specify vendors, manufacturers, or model numbers.”  This is an overly broad statement.  The actual rule states that when such a product or service is identified by name, it must also be accompanied by the phrase “or equivalent” or “compatible with.”

Four important Form 470 issues for FY 2014, not (or barely) covered in this News Brief, were discussed in our newsletter of November 25th.  They are:

  • The requirement to include e-mail addresses for both the Form 470 contact and signer.
  • A revised version of the Form 470 is expected to be approved within the month.
  • The SLD’s broad definition of what constitutes an “RFP.”
  • Prohibitions on selecting multiple service providers for a similar service.
Disclaimer: This newsletter may contain unofficial information on prospective E-rate developments and/or may reflect our own interpretations of E-rate practices and regulations. Such information is provided for planning and guidance purposes only. It is not meant, in any way, to supplant official announcements and instructions provided by either the SLD or the FCC.